1 Bookkeeping Success! “We need a certain delight in tending the books, like in tending a garden.” ~ Connie Harvey

2 Organization and Filing * Divide your paperwork into 4 sections:  Action needed to be taken (folder - bills to pay, etc)  Action taken but not yet recorded in the system  Completed paperwork ready to be filed (tray)  Completed paperwork filed away (big filing cabinet) Set up and label file folders:  By Date – All items in Daily, Weekly or Monthly  By Function – Bank Statements, receipts, etc.  Alphabetically – Customers and Vendors * Credit to: Bookkeeping is not a four-letter word by Janet L. Redick

3 It’s all about balance Assets – Liabilities = Owner’s Equity Debits Credits

4 Debits and Credits Assets  Bank Accounts  Accounts Receivable  Buildings/Land  Equipment, Vehicles, etc  Inventory  Pre-paid Expenses Liabilities  Loans  Credit Cards  Accounts Payable  Sales Tax Payable  Payroll Liabilities  Gift Certificates Sold  Rent Deposits Held Equity (Shareholders)

Something to Remember: Assets, Liabilities and Equity are part of the Balance Sheet and are normally on the top of the list in the Chart of Accounts and have a register when you double-click. Income, COGS, and Expenses are a part of the Profit & Loss Statement and are normally on the bottom of the list in the Chart of Accounts and have a quick report when you double-click. 5 Note: Before electronic bookkeeping, there were many journals to post to.

Double Entry Accounting Q: What does that mean? A: Posting Debits and Credits to the Balance Sheet and/or the Profit & Loss Statement.  Note: The Balance Sheet is for Reality, and the Profit & Loss is for Reporting 6

In an Invoice: DebitCredit Accounts ReceivableSales Sales Tax Payable Cost of Goods SoldInventory Asset In a Sales Receipt: DebitCredit Undeposited FundsSales/Sales Tax Payable Cost of Goods SoldInventory Asset 7 Double Entry Accounting ►QuickBooks does it for you behind the scenes:

8 In the Enter Bills: DebitCredit Inventory AssetAccounts Payable Expenses In the Payroll: DebitCredit Payroll ExpensesChecking Payroll Liabilities Double Entry Accounting con’t… ►QuickBooks does it for you behind the scenes:

9 Some Pitfalls to Avoid:  Accounts Receivable Recording payments without using “Receive Payment”  Accounts Payable Recording Checks without using “Pay Bills”  Sales Tax Payable Recording Checks without using “Pay Sales Tax”  Payroll Taxes Payable Recording Payments without using “Pay Payroll Liabilities” No more “widows and orphans”!

10 NOTES: Only Accumulated Depreciation has a negative balance. Inspect the Sales Tax and Payroll Tax Liabilities Regularly. Verify the Open Invoices and Bills Payable Regularly. Reconcile All Bank, Credit Card and Loan Statements, making sure to deal with errors right away!

Go through the “QuickBooks Diagnostics” document now… 1.Look at the Chart of Accounts (Ctrl A) 2.Look at the Open Invoices Report 3.Look at the Deposit Window 4.Look at the Pay Bills Window 5.Look at the Pay Sales Tax 6.Look at the Payroll 7.Look at the Items List 8.Look at the Profit and Loss report 11

12 The General Ledger Your best tool for entering transactions you don’t know what to do with, such as:  Daily Sales from a cash register tape with deposits going to several accounts due to merchant card service, cash payouts, etc.  Owner Investments and Draws  Adjustments “The Catch All”

13 The Financial Statements Balance Sheet  Snapshot at the moment of all accounts Statement of Cash Flows  Cash movements during a given time period derived from operating, investing and financing activities Profit and Loss  Income and expenses during a given time period The Big Picture

14 “Best Practices” or Good Habits Enter transactions at least once a week Cash transactions Checkbook transactions Credit Card transactions, etc. Reconcile all statements once a month Checking and Saving Statements Credit Card Statements Loan Statements, etc. Back up often Think of it like watering your plants, or brushing your teeth… you do it as often as is needed to stay healthy.

15 Another Good Thing To Do: Map your Chart of Accounts to your Tax Form (Schedule C, 1065, 1120 or 1120S) Tax-Line Mapping is in the “Edit Account” window. *Opening Balance Equity should come to $0.00

16 Employees and Payroll  941 – Federal Withholding Taxes (quarterly)  941N – Nebraska Withholding Tax (quarterly)  UI Connect – State Unemployment Tax (quarterly)  Note: The above three taxes may need to be deposited more frequently.  940 – Federal Unemployment Tax (annually)  W-2’s and 1099’s  W-3 – Federal Withholding Reconciliation  W3-N – Nebraska Withholding Reconciliation  W-4’s – Employee’s Withholding Allowance  W-9 – Request for TIN (when hiring Contractors) Basic Forms:

17 Prompts and Automation Laminated Charts and Reminders  Visual color coded instructions See examples…  Pop-ups from your computer calendar, QuickBooks, Outlook, Hotmail, etc. Templates, Programs and Calculators  Data input forms and reports using computer programs such as QuickBooks, Excel and Access See examples…

18 Federal Taxes:  Click Business, then Small Business/Self-Employed State Taxes:  Click Business, then choose topic. Business Knowledge Center:  General Information on Management and Business “Help” on your computer program menu bar.  QuickBooks has an excellent Help tool Know where to get help Or, call us at Efficiency Counts Or

19 Tend the Books Give the Books to another to tend But don’t neglect the Books…. Or your business can’t succeed

20 “Where you tend a rose, ~ a thistle cannot grow.” Frances Hodgson Burnett